Mr. Speaker, this Honourable House will recall that precipitated by the reform of the EU’s Sugar Regime, translated into a 36% cut in sugar prices between 2005/6 and 2009/10, as well as the huge debt burden of The Sugar Company of Jamaica, the previous Government articulated in this House in October 2005, a new Strategy for the transformation of the Sugar Industry. The essential feature of that strategy entailed the transformation of the sugar industry to a sugar cane Industry based on the production of multiple products, that is, sugar, molasses, rum, ethanol and cogeneration. Mr. Speaker, the idea is that this transformation be driven essentially by private investment. Hence, the Government embarked on a privatization exercise to divest its interest in the 5 state-owned sugar estates. As a consequence, a Sugar Enterprise Team was formed headed by Mr. Aubyn Hill.
Mr. Speaker, The Enterprise Team invited investors to submit prequalification bids in May 2006, and after 2 subsequent extensions, this exercise was closed in June 2007, after which 8 prequalified investors were selected to submit formal proposals. Mr. Speaker, in October 2007, the current Government approved the 8 prequalified bids and also appointed a Sugar Negotiating Team (SNT) to carry out negotiations with the companies which were expected to submit bids. Of the 8 prequalified companies, only 4 purchased the Information Memorandum, which was available as at December 14, 2007. Following the official invitation to bid, due diligence was conducted by a number of the shortlisted companies. One bid was submitted, from Infinity Bio Energy Limited from Brazil. The Negotiating Team commenced negotiations with Infinity Bio Energy Limited on Monday, 11 March 2008, an exercise which has culminated in the signing of a Heads of Agreement last Friday, 27 June 2008.
Infinity BioEnergy LimitedMr. Speaker, Having regard to our objective of developing a sustainable sugar cane industry based on multiple products, we were encouraged by the interest and proposal from a Brazilian company, given the extensive and undisputed experience of Brazil in the sugar cane business. Mr. Speaker, Brazil produced twenty percent of world sugar output or 30M tonnes in 2006, one third of world ethanol production or 16 billion litres in that same year, with mandatory blend of gasoline with ethanol at twenty five percent, with up to E 100 achieved for individual motor vehicles.
Mr. Speaker, Infinity Bio Energy Limited is essentially a bio-fuels company. The company, incorporated on March 15, 2006 under the Bermudian Companies Act, under the name Infinity Bio-Energy Ltd, has as its main goal to become a global leader in the production and distribution of ethanol and other biofuels. Listed on the London Stock Exchange, this company owns some eight (8) facilities in Brazil involved with sugar and ethanol production. Jamaica represents its first major acquisition in the Caribbean.
Heads of AgreementThe Heads of Agreement outlines the essential terms of the transaction and the terms and conditions on which the Parties shall jointly seek to implement the modernization and diversification of the sugar cane industry. The Heads of Agreement also identifies the actions to be taken by the Government of Jamaica and Infinity Bio Energy to give effect to Infinity’s plan for improvements to the Industry.
Mr. Speaker, I wish to emphasize that the signing of the Heads of Agreement represents only the beginning of a process of transition of ownership from the Government to Infinity Bio Energy Limited. During this transitional period, the Sugar Company of Jamaica will retain management control of the 5 estates and the employment status of all categories of workers remains unchanged. The Government expects that at the end of September, we would be in a position to formally hand over the assets to the new company, and it is at this point that redundancy payments will become relevant. I also want to hasten to assure all workers that all the necessary redundancy payments will be made on time, consistent with our labour laws and the contracts signed between the Unions and SCJ.
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